China's Shanghai split in two for Covid lockdown as asymptomatic cases surge

China's financial hub of Shanghai launched a planned two-stage lockdown of the city of 26 million people on Monday, closing bridges and tunnels, and restricting highway traffic in a scramble to contain surging local Covid-19 cases.

The snap lockdown, announced by Shanghai's city government on Sunday, will split the city in two roughly along the Huangpu River for nine days to allow for "staggered" testing. It is the biggest Covid-related disruption to hit the city so far.

The announcement also marks a turnaround for the local government, which last week expressly denied Shanghai would be locked down as it pursued a more piecemeal "slicing and gridding" approach to try to prevent infections from spreading.

Wu Fan, a member of Shanghai's expert Covid team, told a briefing on Monday recent mass testing had found "large scale" infections throughout the city, triggering a stronger response.

"Containing the large scale outbreak in our city is very important because once infected people are put under control, we have blocked transmission," she said, adding that testing would be carried out until all hidden risks are eliminated.

A record 3,450 asymptomatic Covid cases were reported in Shanghai on Sunday, accounting for nearly 70% of the nationwide total, along with 50 symptomatic cases, the city government said on Monday.

Shanghai's Public Security Bureau said it was closing cross-river bridges and tunnels, and highway tollbooths concentrated in the city's eastern districts through 1 April. Areas to the west of the Huangpu River will have similar restrictions imposed 1-5 April.

In a statement posted to its official Weibo account, the bureau said traffic controls would be implemented on highways into and out of the city, requiring people leaving Shanghai to show proof of negative results from nucleic acid tests taken within 48 hours.

The city government said on Sunday it would suspend public transport, including ride-hailing services, in locked down areas. It also ordered the suspension of work at firms and factories, with the exception of those offering public services or supplying food.

US automaker Tesla is suspending production at its factory in the city for four days, two people familiar with the matter told Reuters. Tesla did not immediately respond to a request for comment on Monday.

The recent surge of Covid cases in China has added to pressure on the world's second-largest economy, likely further chilling consumer spending.

China's National Health Commission on Monday reported 5,134 new asymptomatic cases for 27 March, and 1,219 local confirmed infections.

"Owing to the worsening Covid-19 situation, we revise down our y-o-y GDP growth forecasts in Q2, Q3 and Q4 from 3.8%, 5.1% and 5.1% to 3.4%, 4.8% and 4.9%, respectively, but maintain our 2022 annual GDP growth forecast at 4.3%," analysts at Nomura said in a note on Saturday.

"Due to the high transmissibility of Omicron and strengthened (zero-Covid strategy), markets need to especially be concerned about a slide in growth in Q2."